An unsecured personal loan does not require the lender to put down any collateral. This type of loan is also known as a signature loan because all that is required as collateral is your signature. The criteria for an unsecured personal loan are based on the credit of the borrower and have nothing to do with whether or not you own a home or rent.

Despite the fact that the lender has no claim to any of the borrower’s assets in the event that the loan is defaulted on, the lender can choose legal means to recover the money. If the case is won in court by the lender, the borrower may then find it necessary to sell some of his assets to pay back the money.

Due to the fact that this loan is not secured, the interest rate is generally high and the APR or rate of interest is greater than that found on a secured personal loan.

Advantages of an Unsecured Personal Loan

There are some benefits of an unsecured personal loan that are worth taking into account:

• Credit history is the variable that lenders look at and assets play no role in the decision making process.
• Borrowers do not have to worry about providing any copies of their tax returns or any financial statements. Most lenders of guaranteed unsecured loans offer a stated loan which means that the person is taken at their word about the present state of their finances and does not need to have documents to verify such.
• Borrowers do not have to come prepared with an elaborate business plan as an unsecured personal loan can be sought for any purpose, whether it be personal or otherwise. The lender is not as concerned about your purpose for wanting to borrow the money but instead about your ability to pay the money back.
• Most unsecured personal loans are approved in a relatively short period of time which means there is no long drawn out waiting period for the money.
• The application process for an unsecured loan is very simple and easy to fill out. In most cases it is a one page application form with very basic information required.

Apologies for missing last week, school finals are picking up and school comes first.

The key to becoming rich is to manage your money more effectively, this means getting out of longterm debt (high credit card balances, mortgages, student loans etc.) and instead just use money to your advantage (credit card benefits, interest being payed to you not from you).

If you are like most people you are in debt, probably two or three cards with anywhere from $1000 to $10000 each not to mention home mortgage, car payments etc, maybe you are barely making minimum payments. And you want out.. So do you pay off the smallest one first like some people would have you believe? or does it make more sense to pay off highest rate first and work your way down?

Some people think it is better to pay small stuff first for the “moral victory”. Crunching the numbers tell you that highest rate first costs you the least amount of money in the long run. SO why would some people would like you to spend more money in the long run to get you out of debt and on the road to finical freedom? Mindset, your too dumb to understand how debt works so if you get lots of these little victories you continue your fight. Kind of insulting right? Well then again you are the one that got into debt (which isn’t avoidable sometimes, the trick here is to make sure the thing you are becoming indebted to is worth it so at least you are not going into debt for buying junk).

Sure I am harsh, but the important thing here is not that we are friends, it is that I give you good advice, and to hurt your bottom line because I personally don’t think you are smart enough to keep on trying with out lots of little fake victories. That is just ill-logical budgeting.

Read Also

• Credit Cards Vs. Debit Cards
• Credit Card are Cool or Brainwashed Budgeting
• I’m thinking of a number….

I got a few nasty emails about my last post, people claiming not to be brainwashed yet still hating credit because it is evil. So I would like to continue my point.

1. When used properly you can increase your credit score, getting you a better rate for when you are forced to get a loan, (lets face it not everyone can pay cash for a house).

2. Many Credit cards have perks (2% cashed back, ect), if you are spending the money anyways, might as well get some cash back to lower your costs.

3. Easier and therefore better for keeping track of expenses then the old pen and paper.

Now I agree there are some people out there that can not handle an open credit line, they are foolish, and get into sticky situations where they get into debt up to their eyelids and just struggle to make ends meet. These people should destroy their cards, (if you can’t handle the temptation you should get out of the kitchen). But to make a blanket statement that everyone should destroy their cards is just foolish and bad advice. It is better advice to use them only if you need to, don’t dig yourself in too deep, and if you get in trouble there is always your emergency fund.

Bottom line is that debt is a tool, much like a hammer, if you are too dumb to not hammer your fingers, either learn how to not hit your fingers or use a screwdriver.

 Read Also

• Credit Cards Vs. Debit Cards 

I use both, what a disclaimer . As I mentioned before however I do not carry a month to month balance on my Credit Card. Why even have a credit card then? Building a credit score, credit scores are all about showing that you can manage having an open line of credit. I have all of my monthly payments set up to hit on the credit card and then usually buy gas and food on the card. Then around the 20^th of every month I pay it off (online of course), statement comes on the 30 and says “see you next month”. I am young and so if I was to carry a balance on my card I would be hit with something crazy like 22% APR… Highway robbery! Since I only put budgeted items on my card I never get in over my head either, all unplanned items I use the debit card for.

I always try to keep my debit card around, as a college student there is an unwritten law that I am not allowed to carry cash. To be honest I don’t mean to always have no cash, but it makes budgeting easier so I am not complaining. I am able to track what I spend my money on down to the cent, where if I carried a lot of cash I would only have estimates (or sort through a pile of receipts). There is only one store I know of that doesn’t accept plastic that I shop at (it is a great local pizza place), any other store probably wouldn’t get my business. Do you use plastic to help your budget? Or are you brainwashed into thinking that credit of any kind is bad?

There are ads allover the internet and your TV for credit reporting services. In my opinion they are all scams. By law you are allowed to check your credit report once a year for free and that is what you should do! Why pay $20-30 for a report for something I can get for free every year? “But these companies track your credit rating for you!” is the common answer, which may or may not be true, but if you check your report once a year you will always be within the complementary time period to argue/fix your credit score. So why bother knowing the second that your identity gets stolen.

Another reason to not pay a third party to “track” your credit score for you is that it provides a false sense of security, if you know someone is supposedly watching out for you then you may not dispose of sensitive documents properly, let your guard down and make you more likely to be targeted. That is the funny thing about insurance (lets face it credit score watching companies is just another type of insurance). But more on insurance later.

Don’t get me wrong you should always check your credit report, always dispose of sensitive documents properly and of course always check your bank balances, budget and you should never act more indiscriminate just because you have insurance.

If none of these reasons work for you, how about the ads are just dumb. Why does the guy from free credit report (BTW it itsn’t free) want to be working in a restaurant? Because he got his credit stolen… Yah I didn’t see the connection either. It is sad how much of a consumer nation we have become.